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LVMH Confident on Luxury Demand as Revenue Beats Estimates

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LVMH Sales Top Estimates, Remains Confident for Rest of Year
“The third quarter showed a continuation of the trend evident since the start of the year,” LVMH said said in a statement. “The momentum continued in Asia, Europe and the United States, while Japan returned to growth over the period.” Photographer: Jerome Favre/Bloomberg

Oct. 18 (Bloomberg) -- LVMH Moet Hennessy Louis Vuitton SA, the maker of Celine handbags and TAG Heuer watches, reported third-quarter sales that topped analysts’ estimates and said it is confident for the remainder of 2011.

Revenue rose 18 percent to 6.01 billion euros ($8.28 billion), the Paris-based company said today in a statement. That was more than the 5.85 billion-euro average of seven analysts’ estimates compiled by Bloomberg. Excluding currency swings and acquisitions, sales advanced 15 percent, LVMH said.

An acceleration in fashion and leather-goods sales “notably demonstrates that capacity constraints are no longer an issue” at Louis Vuitton, Antoine Belge, an analyst at HSBC who has a “neutral” recommendation on the stock, said in a note. Vuitton opened additional production facilities after inventory shortages in the first half.

LVMH joins Burberry Group Plc in expressing optimism. Burberry, the U.K.’s largest luxury-goods maker, said last week that it sees no signs of a slowdown in its markets. Bain & Co. sounded a note of caution yesterday, saying that luxury-goods sales growth may weaken in 2012 from this year’s 10 percent gain as Europe’s sovereign-debt crisis weighs on purchases of expensive handbags and other items in the region.

“The third quarter showed a continuation of the trend evident since the start of the year,” LVMH said in the statement. “The momentum continued in Asia, Europe and the United States, while Japan returned to growth over the period.”

Bulgari, Hermes

LVMH, the world’s largest maker of luxury goods, agreed to buy Bulgari SpA in March and has built up a stake in Hermes International SCA to benefit from surging demand for $3,200 white gold and diamond earrings and $7,500 Birkin bags.

LVMH shares fell 1.2 percent to 112.20 euros as of 9:09 a.m. in Paris, while the CAC 40 index of French stocks was down 1.9 percent. LVMH has declined 8.9 percent this year, giving the company a market value of 57 billion euros.

Nine-month sales climbed 15 percent to 16.3 billion euros, led by watches and jewelry, selective retailing and fashion and leather goods, LVMH said.

Revenue at LVMH’s fashion and leather-goods unit, which includes Vuitton and Berluti, rose 15 percent on a so-called organic basis in the nine months, boosted by strong demand for leather lines and classical products, the company said. LVMH, which inaugurated the Maison Louis Vuitton in Singapore in the third quarter, will open fewer stores net of closures and invest more on enlarging some of its current boutiques, Vuitton chief Yves Carcelle said last month.

Asian Tourism

Watch and jewelry sales rose 26 percent, excluding currency swings and the impact of acquisitions, in the nine months through September, LVMH said. “Bulgari is performing well across all product categories,” the company said.

Revenue at the selective distribution unit, which includes DFS and Sephora, gained 19 percent on the same basis in the period, LVMH said. DFS continued to benefit from the expansion of Asian tourism, particularly in Hong Kong and Macau, while Sephora increased market share in all its regions.

Nine-month sales of wines and spirits climbed 11 percent on an organic basis, and perfume and cosmetics revenue rose 10 percent in the period, LVMH said.

To contact the reporter on this story: Andrew Roberts in Paris at aroberts36@bloomberg.net

To contact the editor responsible for this story: Celeste Perri at cperri@bloomberg.net

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